3 Essential Bookkeeping Reports to Review Monthly

Feeling Overwhelmed by Business Finances?

We get it. As a business owner, managing finances can feel like navigating a maze. But carving out time each month to review key financial reports can make all the difference. Not only does it help identify potential issues early, but it also unveils growth opportunities and empowers better decision-making. Let's take a closer look at three critical reports to include in your monthly routine.

Understanding Your Income Statement

The Income Statement, or Profit and Loss Statement, offers a detailed snapshot of your income and expenses over a given period. This report is invaluable for revealing profitability and understanding your cost controls. It plays a crucial role in budgeting and steering investments. However, be wary of certain red flags, such as decreasing profit margins, an unexpected surge in operating expenses, or sustained losses despite stable sales—these may hint at underpricing or excessive overhead.

Monitoring the Balance Sheet

Your Balance Sheet provides a snapshot of your assets, liabilities, and equity at a specific point in time. It’s a vital tool for assessing your company's stability and making informed decisions about growth or risk. Keep an eye out for potential issues, like a shrinking cash balance with no clear cause, rising debt not matched by income growth, or negative/shrinking owner equity, as these could indicate underlying financial health problems.

Checking the Accounts Receivable Aging Report

This report breaks down unpaid invoices by their age, highlighting payment delays that could impact cash flow. Regularly reviewing it can spotlight troubling trends, such as an increasing number of late payments in the 60–90+ day range or over-reliance on a single customer with overdue invoices. Addressing these issues promptly is vital for maintaining cash flow stability.

Taking charge of your financial health begins with consistent review of these reports. By acting early on red flags and recognizing trends, you can steer your business toward future growth. If you have questions about bookkeeping or payroll, don't hesitate to reach out for professional assistance. Together, we can navigate your financial journey.